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"I Have Found a Flaw..."

These few words, a shocking admission at the time, were uttered by former chairman of the Federal Reserve, Alan Greenspan, back in October 2008. They are the basis for a new documentary from filmmaker David Sington titled "The Flaw" airing on the BBC's Channel 4 tonight, and now available online.

During a hearing on the role of federal regulators in the financial crisis, Greenspan was asked about his long-standing disdain for government regulation of the financial markets.

Representative Henry Waxman put it simply: "Were you wrong?"

Partially, he responded. And a few minutes later this exchange occurred:

REP. WAXMAN: Do you feel that your ideology pushed you to make decisions that you wish you had not made?

MR. GREENSPAN: Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I've found a flaw. I don't know how significant or permanent it is. But I've been very distressed by that fact. But if I may, may I just answer the question --

REP. WAXMAN: You found a flaw in the reality --

MR. GREENSPAN: Flaw in the model that I perceived as the critical functioning structure that defines how the world works, so to speak.

REP. WAXMAN: In other words, you found that your view of the world, your ideology was not right. It was not working.

MR. GREENSPAN: Precisely. That's precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

And if you have an hour or four, you might want to watch the original C-SPAN coverage: